LIQUIDITY TO REMAIN TIGHT

Liquidity continued to remain tight in the system with banks collectively borrowing more than Rs 1,15,000 crore from the RBI under the liquidity adjustment facility. According to bankers, the demand for funds from banks at the beginning of a new fortnight is causing a liquidity crunch. In addition, demand for funds on account of Power Grid's Rs 7,500-crore follow-on offering is also exacerbating the liquidity deficit.O n Tuesday, call rates had ended at 7.10-7.15 per cent. Under the first liquidity adjustment facility conducted by the RBI, there were 41 bids for Rs 71,020 crore in the one-day repo auction. In the reverse repo auction, there were 2 bids for Rs 1,750 crore. In the second LAF, there were 37 bids for Rs 48,375 crore in the repo auction. In the reverse repo auction, there were 2 bids for Rs 100 crore. In the CBLO auction, there were 504 trades for Rs 31,317.85 crore in the range of 6.15-6.45 per cent.

SOURCE: http://www.thehindubusinessline.com/2010/11/11/stories/2010111152560600.htm